Correlation Between IShares Russell and IndexIQ
Can any of the company-specific risk be diversified away by investing in both IShares Russell and IndexIQ at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Russell and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 2000 and IndexIQ, you can compare the effects of market volatilities on IShares Russell and IndexIQ and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Russell with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and IndexIQ.
Diversification Opportunities for IShares Russell and IndexIQ
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IndexIQ is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 2000 and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and IShares Russell is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Russell 2000 are associated (or correlated) with IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of IShares Russell i.e., IShares Russell and IndexIQ go up and down completely randomly.
Pair Corralation between IShares Russell and IndexIQ
If you would invest 16,531 in iShares Russell 2000 on August 24, 2024 and sell it today you would earn a total of 995.00 from holding iShares Russell 2000 or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
iShares Russell 2000 vs. IndexIQ
Performance |
| Timeline |
| iShares Russell 2000 |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Russell and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and IndexIQ
The main advantage of trading using opposite IShares Russell and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell position performs unexpectedly, IndexIQ can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IndexIQ will offset losses from the drop in IndexIQ's long position.| IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 |
| IndexIQ vs. VictoryShares Discovery Enhanced | IndexIQ vs. First Trust Mid | IndexIQ vs. First Trust Small |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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